While the Monetary Policy Committee (MPC) of the Central bank, Bank of Botswana on Tuesday decided to maintain the bank rate at 5.5 percent, the government has on the other hand decided to increase the prices of petroleum products.
In his first address of the press, governor of Bank of Botswana Moses Pelaelo said that the Tuesday meeting of the MPC concluded that the outlook for price stability remains positive, with forecast inflation within the 3 ÔÇô 6 percent objective range in the medium term.
“The current state of the economy and both the domestic and external economic outlook, including the inflation forecast, suggest that the prevailing accommodative monetary policy stance remains consistent with maintaining inflation within the Bank’s medium-term objective range of 3 – 6 percent”, Pelaelo said.
The Consumer Price Index (CPI) data provided by the government statistics agency, Statistics Botswana mid last month indicate that domestic inflation increased marginally from 3 percent in December 2016 to 3.1 percent in January 2017.
“Inflation is forecast to be within the 3 – 6 percent objective range in the short to medium term. Subdued domestic demand pressures and modest increase in foreign prices contribute to the positive inflation outlook in the medium term. The outlook is subject to downside risks emanating from sluggish global economic activity and the resultant low commodity prices.” Pelaelo told financial journalists in the capital Gaborone on Tuesday.
Pelaelo went on to warn that the projections could be adversely affected by any unanticipated large increase in administered prices and government levies as well as international oil and food prices beyond current forecasts.
On Thursday, the government, through the Ministry of Resources, Green Technology and Energy Security announced its decision to increase prices of petroleum products.
The ministry’s press statement shows that retail prices for unleaded petrol 93 and 95 has since be increased by 20 thebe per litter as of yesterday (Saturday). On the other hand, retail prices for diesel 500ppm have been increased by 25 thebe per litter.
International oil prices rebounded from an average low of USD 30 per barrel in January 2016 to above USD50 per barrel in December. The recovery in oil prices was supported by the progress made towards cooperation on limitation production by major producers. Similarly, international food prices increased by 12 percent in 2016 compared to a decline of 17.5 percentage in 2015.
Meanwhile Pelaelo told journalists on Tuesday that, generally international oil and food prices present a low risk to domestic inflation in 2016.